Unqualified service providers impairing sector's development

While China's hair transplant industry is booming, unqualified service providers, misinformed customers and irrational competition are impairing its long-term development, industry insiders said.

Revenues of the five largest hair transplant companies are estimated to total about 2 billion yuan ($290 million) to 3 billion yuan a year, accounting for less than 20 percent of the total market, while the rest is taken up by numerous small and even unqualified service providers, resulting in fierce competition, according to Liu Zheng, CEO of Lotus, a major chain of private hair transplant clinics in China.

Private hair transplant facilities have developed rapidly in recent years due to exploding market demand and a lack of direct competition from the public hospital system, Liu said.

Meanwhile, chains of clinics and medium-to-large-sized private sector facilities often operate in big cities, leaving unqualified practitioners to prosper in small cities and rural areas, Liu said, adding that many, if not most, private service providers are not properly qualified.

He cited examples of beauty salons without official medical certificates and surgeons who are not registered doctors.

"Hair transplant surgery is an invasive medical procedure that causes bleeding, and must be performed in a sterilized environment by qualified medical professionals," Liu said.

Customers in first-tier and provincial capital cities, who are often aware of medical risks involved in a hair transplant procedure, are more likely to opt for certified facilities and qualified surgeons, largely thanks to the rising popularity of plastic surgery in big cities, he said.

However, people in small cities and rural areas are not so well-informed and many customers have no idea that the services they have are performed in uncertified facilities or by unqualified surgeons, Liu said.

Luo Ying, a partner in Huagai Healthcare Fund, a Beijing-based private equity investment firm that invests in the healthcare sector, said another challenge for the industry is that too much money is spent on advertising to attract new customers and increase market share, instead of on day-to-day operations, which is impairing the healthy development of the industry.

Some companies spend almost half their revenue on advertising, which encourages other firms to do the same, causing irrational competition, she added.

Besides, the experience and integrity of hair transplant professionals is also critical for the industry's healthy development, according to Zhang Yanhua, a hair transplant surgeon and operational president with Cloud Hair BeauCare Clinic in Shenzhen, Guangdong province.

Surgeons need to be experienced enough to evaluate specific requirements such as how many follicles should be transplanted, because as people age, they lose hair, and will need remaining follicles for new hair transplants, she said.

It is important that surgeons treat patients with professional skill and care, not just as a way to make money, she said.